TX Installment Agreements

PACS allows you to create, open, track, and report installment agreements in accordance with the Texas Property Tax Code, Section 33.01 and 33.02. Additionally, you can create, track and default installment agreements on delinquent taxes. It is also possible to generate any of the agreements and letters needed to maintain installment agreements.

The following law, reprinted from the State of Texas Property Tax Code 2004 Edition, applies when working with installment agreements:

Sec. 33.02. Installment Payment of Delinquent Taxes.

(a) The collector for a taxing unit that collects its own taxes may enter into an agreement with a person delinquent in the payment of the tax for payment of the tax, penalties, and interest in installments. The collector for a taxing unit shall, on request by a person delinquent in the payment of the tax on a residence homestead, enter into an agreement with the person for payment of the tax, penalties, and interest in installments if the person has not entered into an installment agreement with the collector for the taxing unit under this section in the preceding 24 months. An installment agreement under this section:

(1) must be in writing;

(2) must provide payments to be made in equal monthly installments;

(3) must extend for a period of at least 12 months;

(4) may not extend for a period of more than 36 months.

(b) Except as provided by Subsection (b-1), interest and a penalty accrue as provided by Sections 33.01 (a) and (c) on the unpaid balance during the period of the agreement.

(b-1) Except as otherwise provided by this subsection, a penalty does not accrue as provided by Section 33.01 (a) on the unpaid balance during the period of the agreement if the property that is the subject of the agreement is a residence homestead. If the property owner fails to make a payment as required by the agreement, a penalty accrues as provided by Section 33.01 (a) on the unpaid balance as if the owner had not entered into agreement.

(c) A property owner’s execution of an installment agreement under this section is an irrevocable admission of liability for all taxes, penalties, and interest that are subject to the agreement.

(d) Property may not be seized and sold and a suit may not be filed to collect a delinquent tax subject to an installment agreement unless the property owner:

(1) fails to make a payment as required by the agreement;

(2) fails to pay other property taxes collected by the unit when due as required by the collector; or

(3) breaches any other condition of the agreement.

(e) Execution of an installment agreement tolls the limitation periods provided by Section 33.05 of this code for the period during which enforced collection is barred by Subsection (d) of this section.

Sec. 31.031. Installment Payments of Certain Homestead Taxes

(a) This section applies only to:

(1) an individual who is:

(A) disabled or at least 65 years of age;

(B) qualified for an exemption under Section 11.13 (c)

(2) an individual who is qualified for an exemption under Section 11.22.

(a-1) An individual to whom this section applies may pay a taxing unit’s taxes imposed on property that the person owns and occupies as a residence homestead in four equal installments without penalty or interest if the first installment is paid before the delinquency date and is accompanied by notice to the taxing unit that the person will pay the remaining taxes in three equal Installments. The second installment must be paid before April 1, the third installment before June 1, and the fourth installment before August 1.

(a-2) Notwithstanding the deadline prescribed by Subsection (a-1) for payment of the first installment, an individual to whom this section applies may pay the taxes in four equal installments as provided by Subsection (a-1) if the first installment is paid and the required notice is provided before March 1.

(b) If the individual fails to make a payment, including the first payment, before the applicable date provided by Subsection (a-1), the unpaid amount is delinquent and incurs a penalty of six percent and interest as provided by section 33.01 (c). The penalty provided by Section 33.01(a) does not apply to the unpaid amount.

(c) An individual may pay more than the amount due for each installment and the amount in excess of the amount due shall be credited to the next installment. An individual may not pay less than the total amount due for each installment unless the collector provides for the acceptance of partial payments under this section. If the collector accepts a partial payment, penalties and interest are incurred only by the amount of each installment that remains unpaid on the applicable date provided by Subsection (a-1).

(d) If the delinquency date for taxes to which this section applies is postponed to May 1 or a later date, the collector shall extend each installment deadline provided bySubsection (a-1) by the number of months that the delinquency date was postponed.

Cross References:

Statute of limitations, see Sec. 33.05.

Delinquent tax suits, see Sec. 33.41.

Personal property seizure, see Sec. 33.21.

Delinquent tax receipt information, see Rule Sec. 9.1001.

Procedure

1. In PACS Collections, do one of the following:
   • Open the Taxpayer record on which you want to create and record the agreement.
   • Open the property with the delinquent taxes, click the Owner-Agent tab, and then click Details to open the Taxpayer record.
2. Select the Installments tab and click New.

   

3. In the Installment Agreement Wizard, review the List of properties to include on this Installment Agreement. Use the following options as needed:
   • To search for additional properties that you want to include in this installment agreement, click Add and use the Property Search to identify and select a property.
     • The next page of the wizard allows you to select specific bills to include in the agreement.
   • To omit a property and its bills from the agreement, highlight a property listed in the Installment Agreement Wizard and click Remove.
     • Properties with Installment Agreements can only be removed if no payments have been made yet.
   • Highlight a property and click Details to open the property record and review other details.
     

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     Note:  The HS Exempt Column is located in the List of Properties to include on this Installment agreement to indicate a HS Exemption exists on the property. This is intended to aid in identifying HS Exempt properties.

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4. Click Next to continue creating the agreement.

   The list of bill statements is displayed. All bills associated with every property on the previous screen are listed here. The only bills not included on this screen are those with a $0.00 balance, those currently attached to an installment agreement, and those in quarterly or half payment.

5. Review the list of statements. Select individual bills by clicking on the check box at the beginning of each row. Use the following options to aid your selection process:
   • Check All – Selects every bill listed
   • Uncheck All – Deselects every bill listed

     

6. When you have finished making your selections, click Next to continue.
7. Review the Amount Due; this value represents the balance due as of the posting date for the bills that were selected on the previous screen. Then do the following:
   • Use the drop-down calendar to choose the Start Date. This is the date the Installment Agreement begins.
   • Select the Payment Terms from the drop-down list–choose Monthly payments.
   • Choose the Payment Order. Applying payments to the most recent bills typically increases the collection percentage.
   • Enter a Ref ID; this is an internal reference ID that you can use if needed.

NOTE:  The sum of the installment payments will not equal the total amount due, as the total installment amount is based on a calculation and assumes the payments are made as of the schedule created. As such, additional penalty and interest is assumed in each payment amount which may not yet be accrued in the Total Due field. To help reduce confusion, a footnote was added for the Amount Due Field. If payments are made which differ from the installment agreement schedule, the payment amounts and amount due are not guaranteed to match at the end of the agreement. This includes early or late payments and over or under payments.

1. Choose one of the following terms of payment options:
   • Number of Payments – Allows you to select a specific number of payments to be made
   • Monthly Payment – Allows you to specify the amount to be paid each month
   • Homestead Exempt – This will indicate that the user wants to apply this as a Residence Homestead installment agreement.
   • Do Not Accrue Attorney Fee Option – This will indicate that the attorney fee should not be assessed on the bill which have not already accrued the attorney fee. A posting date earlier than July 1st of the delinquent year is used to determine if the attorney fee should be assessed. For an installment agreement which contains multiple years including the current delinquent year created prior to July 1, only the current delinquent year would be affected by the option.
     

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     Note Regarding the ‘Do Not Accrue Attorney Fee’ option: If the attorney fee has already been assessed, this option will have no effect on the bills. For example, if the agreement is created where the posting date is after July 1st of the delinquent year the attorney fee would be included in the payment amounts over the life of the agreement. The fee is calculated as 20% of the (Base Tax+Int+Penalty), increasing each month as the P&I amounts are increasing each month.

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     Note Regarding the ‘Homestead Exempt’ Option: Once selected, PACS will treat property included as a residence homestead for the purpose of calculating installment agreements. Penalty will not accumulate. If the full annual penalty of 12% have already been assessed, there will be no change to the payment amounts in the agreement. This would be the case if the installment agreement is created after July 1st of the delinquent year.

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2. After you have chosen the payment terms, click Create Schedule to review the installment plan as it is currently configured.

   

   PACS generates a payment schedule based on your selections. You can set up and review different options and create schedules to work with the taxpayer until you click Finish.

3. After you achieve the Installment Agreement you want, click Finish to finish and create the Installment Agreement.

Texas Property Tax Code says:

(Title 1. Property Tax Code, Subtitle E. Collections and Delinquency)

33.01. Penalties and Interest

(a) A delinquent tax incurs a penalty of six percent of the amount of the tax for the first calendar month it is delinquent plus one percent for each additional month or portion of a month the tax remains unpaid prior to July 1 of the year in which it becomes delinquent. However, a tax delinquent on July 1 incurs a total penalty of twelve percent of the amount of the delinquent tax without regard to the number of months the tax has been delinquent. A delinquent tax continues to incur the penalty provided by this subsection as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered.

(b) If a person who exercises the split-payment option provided by Section 31.03 of this code fails to make the second payment before July 1, the second payment is delinquent and incurs a penalty of twelve percent of the amount of unpaid tax.

(c) A delinquent tax accrues interest at a rate of one percent for each month or portion of a month the tax remains unpaid. Interest payable under this section is to compensate the taxing unit for revenue lost because of the delinquency. A delinquent tax continues to accrue interest under this subsection as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered.

33.02. Installment Payment of Delinquent Taxes

(a) The collector for a taxing unit may enter an agreement with a person delinquent in the payment of the tax for payment of the tax, penalties, and interest in installments. The agreement must be in writing and may not extend for a period of more than 36 months.

(b) Interest and a penalty accrue as provided by Subsections (a) and (c) of Section 33.01 on the unpaid balance during the period of the agreement.

(c) A property owner’s execution of an installment agreement under this section is an irrevocable admission of liability for all taxes, penalties, and interest that are subject to the agreement.

(d) Property may not be seized and sold and a suit may not be filed to collect a delinquent tax subject to an installment agreement unless the property owner:

(1) fails to make a payment as required by the agreement;

(2) fails to pay other property taxes collected by the unit when due as required by the collector; or

(3) breaches any other condition of the agreement.

(e) Execution of an installment agreement tolls the limitation periods provided by Section 33.05 of this code for the period during which enforced collection is barred by Subsection (d) of this section.

Acts 1979, 66th Leg., p. 2290, ch. 841, § 1, eff. Jan. 1, 1982. Amended by Acts 1997, 75th

Leg., ch. 906, § 5, eff. Jan. 1, 1998; Acts 2005, 79th Leg., ch. 1126, § 16, eff. Sept. 1, 2005.

About PACS Installment Agreements

Tax bills not paid on or before the effective due date are considered delinquent. The amount of unpaid tax incurs interest and penalty. Interest typically starts with a certain percentage for the first delinquent month and accrues at a constant rate for each additional month (or portion thereof) the tax remains unpaid. Penalty charges can either follow this pattern or a flat penalty percent can be assessed.

A Tax Office may allow a taxpayer to pay delinquent tax, penalties, and interest in periodic installments through a Payout Agreement.

PACS structures Installment Agreement (or Payout Agreements) in a way similar to the As of Effective Due Date method.

The As of Effective Due Date Method

This method resembles the Add-on Interest method some lending and finance institutions use to calculate interest charges associated with a loan. The add-on interest method calculates the total interest charged by multiplying the entire loan amount by the interest rate, and then multiplying the total interest by the period covered by the loan. This interest charge is then added to the principal to determine the total, which is then divided by the number of payment periods to calculate the payment.

The following example will use these terms:

The system creates a plan that produces even payments:

Set the due date for each individual payment.

There is no interest on the first payment. The payment for the Base Amount Due of $1,000 over a period of 10 months requires 10 monthly payments of $100. $100 is the Base Amount Due each period.

Now add the applicable interest on each payment based on the effective due date of 2/1. The first payment, due 05/15, is one month delinquent as of the effective due date. The second payment is two months delinquent and so on. The first payment incurs 1% interest, the second payment 2%, and the third payment 3%, and so on. The interest amount due is calculated using Base Amount Due * Interest which equals the Interest Due. The total Interest Due is $55.

The total Payment Due is the sum of the Base Amount Due and total Interest Due: $1,000 + $55 = $1,055

$1,055 evenly split into 10 monthly payments yields the payment amount due for each payment period: $1,055/10 = $105.50. $105.50 is the Actual Payment Due each period.

Finally, calculate the Actual Paid on Base Amount Due by dividing the Actual Payment Due by the total Payment Due, and multiply that value by 100: $105.50 / 101 = $104.455

Repeat these steps for each payment. Summing the Actual Paid on Base Amount Due should yield a total close to the Base Amount Due.

In the example above, the Number of Payments was already set in the terms. If the periodic Actual Payment Due amount is set in the terms, then the calculation is more straightforward, and starts at step six in the previous scenario.

Actual Payment Due = 105.5

Calculate the first payment under Actual Base Amount Due by dividing the Actual Payment Due by the total of 1 plus Interest: $105.50 / ( 1 + .01) = $104.455

Next, calculate the Actual Paid on Base Amount Due remaining after the first payment: $1000 – $104.455 = $895.544

Continue until the remaining Base Amount Due is zero.

Or, to focus on the P&I using a different example table:

Penalties and Residence Homestead Installment Agreement calculations:

• The amount due in an installment agreement for a homestead property will be calculated without including future penalty.
  • Penalty – system will not calculate future penalty on properties included in a homestead exempt agreement.
    • Existing penalty accrued – penalty and interest already accrued when the agreement is created will not be adjusted. This is interpreted as the unpaid balance.
    • Accumulating penalty – system will not accumulate further future penalty on unpaid amount due for a property/bill once included in a homestead installment agreement.
    • Defaulted agreement– if agreement is defaulted, system will start calculating penalty on unpaid balance as if property/bill was not included in an installment agreement.
    • Cancelled agreement– if agreement is cancelled, the system will start calculating penalty on unpaid balance as if property/bill was not included in an installment agreement.
  • Interest– system will calculate without difference from a regular installment agreement.
  • Fees
    • Existing Attorney Fee Accrued – fee already assessed will not be adjusted. This is interpreted as part of the unpaid balance.
    • No Attorney Fee Assessed – agreement is created prior to July 1 of delinquent year, fee will not be assessed for the life of the agreement
    • Defaulted Agreement – if the agreement is defaulted, system will assess fee on unpaid balance as if property/bill was not included in an installment agreement
    • Cancelled Agreement – if the agreement is canceled, system will assess fee on unpaid balance as if property/bill was not included in an installment agreement.

Purpose

Use this procedure to open installment details and begin processing the payment.

Procedure

1. Open the Installment Agreement through one of the following options:
   • Open the property view Tax Due tab and select Bills from the Views drop-down list. Then highlight the statement and click Installments.
   • Choose File > Open > Installment Agreements and enter the search criteria. When the search results are displayed, double-click the agreement to open the details.
2. To process a payment on the installment agreement, highlight the desired line in the Payment Schedule window and click Pay.

   

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   Note:  The Post Payment dialog opens with a payment Code of Partial. Partial is the correct code to use when processing an installment payment. For more information on posting payments, please see the Payment Processing guide.

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3. Use the following options displayed on the General tab of the Installment Agreement dialog box:
   • Default – Sets the highlighted statements to Defaulted status
     

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     Note:  If you choose to set agreements to default, you must enter a reason. Payments can no longer be posted when the agreement is defaulted. A new agreement must be created to resume making partial payments.

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   • Print Agreement – Generates a printed version of the legal contract
   • Print Schedule – Generates a printed version of the payment schedule
4. To print an Installment Agreement-type letter, click the Letter History tab. Then choose the letter from the Available Letters drop-down list, use the arrows to adjust the number of copies to print, then click Print.

   

Note:  Set up Installment Agreement-type letters through Tools > Letter Processing Maintenance > Letter Maintenance. For more information see Setting Up Letter Details in the Letter Processing guide for Collections.

Note:  The Property ID and Property Details’ letter tags need to display together for when multiple properties are included in an installment agreement.

Purpose

Use this procedure to generate a report that displays information on current installment agreements tracked in the system.

Procedure

1. In PACS Collections, choose Reports > Installment Agreement > Current.

   

2. In the Print Current Installment Report dialog box, choose any number or combination of the following options as needed:
   • Name – Includes installment agreements associated with a name. Choose one of the following from the drop-down list:
     • Equal To – Matches the exact name that you enter in the test field, and is case and spelling sensitive
     • Like – Matches names that are similar to the name you enter in the test field, and is not case and spelling sensitive
   • Property ID – Includes installment agreements associated with a specific property
   • Start Date – Includes all current installment agreements that had a start date during a specified date range
   • Payment Amount – Includes installment agreements that have scheduled payments in a specified amount range
   • Total Amount Due – Includes all current installment agreements with a total amount due within a specified range
   • Homestead Exempt – This will allow user to include or exclude the criteria to search for installment agreements that have a residence homestead exempt installment agreement.
3. Click Preview to preview the report. Click Print to generate the report.

Purpose

Use this procedure to generate a report that displays information on defaulted agreements.

Procedure

1. In PACS Collections, choose Reports > Installment Agreement > Defaulted.
2. In the Print Defaulted Installment Report dialog box, choose any number or combination of the following options as needed:
   

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   Tip  To see all defaulted installment agreements, leave all options unselected.

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   • Name – Includes installment agreements associated with a name. Choose one of the following from the drop-down list:
     • Equal To – Matches the exact name that you enter in the test field, and is case and spelling sensitive
     • Like – Matches names that are similar to the name you enter in the test field, and is not case and spelling sensitive
   • Property ID – Includes installment agreements associated with a specific property
   • # Payments Missed – Includes only installment agreements that have missed the number of payments within the specified range.
   • Payment Amount – Includes installment agreements that have scheduled payments in a specified amount range
   • Last Payment Date – Includes only installment agreements that had a Last Payment Date within a certain date range
   • Total Amount Due – Includes all installment agreements with a total amount due within a specified range
   • Default Date – Includes only installment agreements that were set to default status within a certain date range
   • Homestead Exempt – This will allow user to include or exclude the criteria to search for installment agreements that have a residence homestead exempt installment agreement.

   

3. Click Preview to preview the report. Click Print to generate the report.

Purpose

Use this procedure to generate a report that displays information on installment agreements with missed payments.

Procedure

1. In PACS Collections, choose Reports > Installment Agreement > Missed.
2. In the Print Missed Installment Report dialog box, choose any number or combination of the following options as needed:

   

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   Tip  To see all defaulted installment agreements, leave all options unselected.

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   • Name – Includes installment agreements associated with a name. Choose one of the following from the drop-down list:
     • Equal To – Matches the exact name that you enter in the test field, and is case and spelling sensitive
     • Like – Matches names that are similar to the name you enter in the test field, and is not case and spelling sensitive
   • Property ID – Includes installment agreements associated with a specific property
   • Payments Missed – Includes all installment agreements that have missed payments within a specified date range
     • At Least – Narrows results to those installment agreements with a specified number of missed payments
       

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       Note:  To use the At Least option, you must specify a date range. You cannot leave those fields blank.

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   • Payment Amount – Includes installment agreements that have scheduled payments in a specified amount range
   • Total Amount Due – Includes all current installment agreements with a total amount due within a specified range
   • Homestead Exempt – This will allow user to include or exclude the criteria to search for installment agreements that have a residence homestead exempt installment agreement.
3. Click Preview to preview the report. Click Print to generate the report.